What is Forex Trading, How to Use Forex Trading
Hearing the word “Forex”, maybe for some people it is a strange thing to hear. It’s normal if you feel foreign, because this term is indeed more attached to people who are quite experienced in the investment world. Forex or Foreign Exchange has a meaning as a foreign currency transaction. In Indonesia itself, forex is better known as forex or foreign currency. Then, what is forex trading? If you are starting to have a sense of curiosity about what forex trading is, forex trading is an investment product with the activity of buying and selling foreign currencies. This activity of buying and selling foreign exchange, known as forex trading, offers attractive benefits. Maybe you think that when you exchange money to a money changer, it is a forex trading activity. However, actually the explanation will be more complex. So what is forex trading and how is it different from exchanging foreign currencies?
What is forex trading? In general, forex is a transaction of exchanging the currency of the country where you live for the currency of the foreign country of your choice. In addition, forex needs are usually personal or personal, one of which is as a means of payment in other countries that will be visited. So, if you exchange money at a money changer, this activity can be referred to as a foreign exchange. Meanwhile, forex trading has a different meaning. What is forex trading? Forex trading is an activity of buying and selling foreign currency which is usually done online. The purpose of forex trading as an investment in itself is to make a profit from the difference in the sales figures made. Usually those who carry out forex trading activities are known as traders.
What is forex trading and the risks as an investment ?
As an investment instrument, apart from offering benefits, forex trading also has its own risks. Before starting to learn about what forex trading is, it’s a good idea to know the risk profile offered by one of these forms of investment.
Has high risk
Compared to other investment instruments such as mutual funds, stocks and bonds, forex trading has the highest risk. So, what is forex trading and why is it high risk? This high risk occurs because there is a leverage system in their activities. Leverage is a system that allows you to make large amounts of forex trading even though you have less capital.
When you start learning forex trading, you will usually be introduced to this leverage system. As an illustration of leverage, there will be a ratio of 1:100. This comparison indicates that, with a capital of just 1 dollar you can carry out forex trading activities worth 100 dollars. Of course this system looks quite tempting. However, you need to know, that the profits you get can only be obtained if you set up this leverage system with the correct ratio. If you get the strategy wrong, you can lose up to 100 dollars more.
Currency movements that are difficult to predict
Maybe you are aware that the comparison or movement of this currency can be said to be very volatile. Before starting to know what forex trading is, you must have a deep understanding of the movement of these foreign currencies. Many factors can affect foreign currency movements on the forex market. Usually the value of foreign currency will fluctuate based on economic factors, geopolitical factors, it can even occur due to the transactions that are being carried out. If there are many transactions in purchases, of course the currency will increase. On the other hand, if many people start selling their currency, there is a possibility that the value will go down. This understanding of what forex trading is, is continuous with this dynamic currency movement, it will confuse you if you don’t have sufficient knowledge and will cause a sizable loss if you make a mistake. hmm.
Lots of scams
What is forex trading and how is it done? Forex trading is usually carried out online via the internet. The lack of face-to-face transactions will certainly present a great possibility for fraud. This fraud mode is quite diverse and will present big losses. One of them is a fraudulent broker profile. If you use a broker for forex trading, make sure that the broker is of good quality and has good references. If not, you might run away with the profits you get. This is also what causes forex trading to have a bad reputation as an investment instrument.
Need to be active full-time
In order to avoid losses due to fraudulent brokers, when you start trading forex, it’s a good idea for you to be actively involved in fully monitoring your investment movements. Therefore, it will be very difficult if you make forex trading as a part-time activity to have additional income. You have to prepare a considerable amount of time and mind in doing forex trading, if you let your guard down a little, it’s very likely that you will experience a loss. Therefore, after knowing what forex trading is, it is highly recommended that you fully commit to this one investment instrument. After knowing what forex trading is and its risks, maybe you can choose investment products that offer security and risk that is minimal, but adjusted to the risk profile of the target f your initials . As an alternative, you can try to start investing through mutual funds.
Mutual funds are an investment instrument in the form of a collection of funds that are managed as investment capital which can be converted or changed into various types of investment. products, such as stocks, bonds, and other financial and investment products. This pool of funds will later be managed by the investment manager. An investment manager is a management or professional institution that has the task of managing activities or investment activities that you do n, one of which includes mutual funds. With the advantages of investing in mutual funds that are easy to understand with minimal risk than the risks and understanding with the forex trading, it becomes a force to attract the attention of young investors or beginners to start investing. However, the choice of investment instrument is returned to you according to the risk. After understanding what forex trading is and what mutual funds are, in short, mutual funds are suitable as investment instruments for those of you who want to start as a novice investor, all you have to do is make a deposit partner or entrust your investment capital to the investment manager. Usually this investment manager is managed and held by an investment manager. The related parties will later help you to choose and buy the desired mutual funds. After a successful transaction, then you only need to pay attention to the movement and development of your investment while adding funds, just like saving. Therefore, mutual funds are suitable as an investment product for beginners and those of you who do not have enough time to independently manage investments.